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June 18, 2024

Shelby County – Is US Department of Labor Prosecution An Option on Health Insurance Malfeasance?

By Kirk Allen & John Kraft

On July 12, 2021

Shelby Co. (ECWd) –

We first covered the Keith Petard Insurance scandal in this article. If you have not read that article along with the linked documents, we urge you to do so in order to better grasp the information in this article.

For those willing to actually read the County Health Benefit Plan, they would know there are numerous options for the county to recover funds in this matter as well as options when county elected officials ignore what has taken place.

We understand there is a criminal investigation with the FBI that has been going on for some time regarding Shelby Engineering operating their business out of the county highway department in direct violation of state law.  Alan Spesard, current County Highway Engineer, and Keith Petard are business partners in Shelby Engineering.

After seeing the Insurance committee do nothing with this alleged insurance fraud, maybe a formal complaint needs to be filed with the US Department of Labor.  As a Federal Agency, they could very easily request the FBI to include such an investigation into the other malfeasance we already know has taken place by Spesard and Petard, use of the public property for his private business.

Within the County Health Benefit Plan we find the following statement on page 109 (emphasis added) :

“Any Participant who knowingly and with intent to defraud the Plan, files a statement of claim containing any materially false information, or conceals for the purpose of misleading, information concerning any material fact, commits a fraudulent act. The Participant may be subject to prosecution by the United States Department of Labor. Fraudulently claiming benefits may be punishable by a substantial fine, imprisonment, or both.”

Most would agree when a person claims not to be on Medicare when it turns out they were, that indicates concealment.  The purpose of such concealment would have to be determined through a proper investigation.

Other options available to the county are found within the plan however to date we understand none of those options have been exercised.

Page 75 of the plan spells out the process for Recovery of Payments made in violation of the policy.

Occasionally, benefits are paid more than once, are paid based upon improper billing or a misstatement in a proof of loss or enrollment information, are not paid according to the Plan’s terms, conditions, limitations or Exclusions, or should otherwise not have been paid by the Plan. As such this Plan may pay benefits that are later found to be greater than the Maximum Allowable Charge. In this case, this Plan may recover the amount of the overpayment from the source to which it was paid, primary payers, or from the party on whose behalf the charge(s) were paid. As such, whenever the Plan pays benefits exceeding the amount of benefits payable under the terms of the Plan, the Plan Administrator has the right to recover any such erroneous payment directly from the person or entity who received such payment and/or from other payers and/or the Claimant or Dependent on whose behalf such payment was made.”

A Claimant, Dependent, Provider, another benefit plan, insurer, or any other person or entity who receives a payment exceeding the amount of benefits payable under the terms of the Plan or on whose behalf such payment was made, shall return or refund the amount of such erroneous payment to the Plan within 30 days of discovery or demand. The Plan Administrator shall have no obligation to secure payment for the expense for which the erroneous payment was made or to which it was applied.” (See page 75 for additional text not included above)

Page 79 outlines the Right of Recovery

In accordance with the Recovery of Payments provision, whenever payments have been made by this Plan with respect to Allowable Expenses in a total amount, at any time, in excess of the maximum amount of payment necessary at that time to satisfy the intent of this Coordination of Benefits section, the Plan shall have the right to recover such payments, to the extent of such excess, from any one or more of the following as this Plan shall determine: any person to or with respect to whom such payments were made, or such person’s legal representative, any insurance companies, or any other individuals or organizations which the Plan determines are responsible for payment of such Allowable Expenses, and any future benefits payable to the Participant or his or her Dependents. Please see the Recovery of Payments provision above for more details.” (See page 79 for additional text not included above)

The citizens of Shelby County will have to wait at least another month to see if any board action will take place, provided the insurance committee looks at the matter.  We will update you with additional information that becomes available.



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